Retailers had been banking on the weekend to lift the sales gloom, with many slashing prices in a bid to woo shoppers into their stores.

But figures by research group SPSL, which advises Mayor Ken Livingstone, showed that the number of people out spending was down on last year, fuelling fears of economic slowdown.

The Christmas rush is usually huge for the economy with about £50 billion spent by consumers in December. Many retailers make as much as a quarter of their sales and all their profits in the last weeks before the Christmas break.

But according to SPSL, the number of shoppers in Greater London was down between three and four per cent from Thursday to Saturday, although the rest of Britain enjoyed a slight rise.

On Thursday the number of people in shops in Greater London was down 3.2 per cent, on Friday four per cent and on Saturday 3.8 per cent compared with the previous year. Yesterday's figures were expected to be no better.

Analysts said London suffered more than the rest of the country because of a series of factors:

More people were able to fly to New York to buy their Christmas gifts.

American and Japanese tourists shunned the capital as they did not want to be stung by the exchange rate.

A tough year in the financial world has meant lower bonuses, translating to lower spending.

Busy Londoners were more likely to turn to the internet to shop than people elsewhere in the country.

SPSL's director Tim Denison said: "London is feeling the pinch more than most other parts of the country. It's taken a hit. There are a number of factors. The financial world is suffering tremendously, and bonuses won't be paid to the extent they were last year. Londoners are busier people almost by default, and probably more reliant on the internet.

"And obviously, London is a very expensive place in which to shop. We are not seeing the Americans shopping over here - instead we are seeing Londoners going over to shop in the US."

The news comes a week after London's stores said they had suffered the worst November for two years. A rise of only 0.4 per cent in year-on-year sales was the worst since 2005, when the capital was recovering from the 7 July bombings.

It means retailers are pinning their hopes on next weekend to try to salvage their Christmas sales. Mr Dennison said: "Next weekend will be the big weekend for shops but for some it will already be too late."

But other experts painted a slightly brighter picture. Richard Dodd, of the London Retail Consortium, said: "There is more discounting this year because stores are under more pressure than they were a year ago. People are telling us that there are challenging conditions, but I don't think anybody is panicking."

Mr Dodd said that, with Christmas on a Tuesday, he expected this weekend to be the busiest of the year. He added: "The pack arrives later each year. It's a social trend for doing everything more last-minute than we used to." Everyday clothes, shoes, homewares and furniture-have been squeezed particularly hard, the New West End Company's Jace Tyrell said, while luxury items such as Tiffany jewellery and Mulberry handbags are still selling well. Mr Tyrell added: "Homewares and fashion are much harder to sell at Christmas."

However, shoppers were still queuing to pick up the discounted bargains. At Brent Cross Retail Park, the first customers started arriving at 9am yesterday, and sales ran at £5,000 a minute.

Spokesman Tom Nathan said: "We think we have had around 200,000 through the doors this weekend, which is up on last year."

He said technology such as Nintendo Wiis and Apple iPhones were selling well.